Post Tagged with: Reservations

I have been relatively silent recently regarding ReservationHop. We have been doing a lot of exploration (or in startup lingo, “customer discovery”) as we try to find a good niche for innovation in restaurants that benefits consumers and optimizes some part of the dining experience. Consequently, in the last couple of months, we have built and tested various prototypes with several end users. These include:

– A reservation marketplace
– A reservation ticketing system
– A new online reservation system
– A restaurant table and server management software
– An easy restaurant scheduling software

It was on the last development that we started to see an opportunity in the form of service industry workers who have a lot of trouble changing out their shifts. This primary use case, allowing service workers to easily get their shifts covered in a way that fits into their existing workflow, is a niche in which we have seen the most traction.

Enter OK Shift, which we soft-launched a couple weeks ago and have been beta testing in several locations around the country. OK Shift is an SMS-based, cross-industry scheduling tool that lets hourly service industry employees get shift coverage, secure manager approval, manage their schedule and communicate with their coworkers.

Moreover, the technology that almost all service workers use to manage their last-minute shift coverage run-of-the-mill text messaging. Not everyone has a smartphone, but everyone has an SMS-enabled cell, and anyone who has worked in the service industry will tell you that the only way to get shifts covered is to text or call coworkers on an individual or case-by-case basis.

The best part about OK Shift is that it’s free. Signing up is easy. If you work in the service industry, simply text HELLO to 513-OK-SHIFT (513-657-4438) or visit 513-ok-shift.com.

Why did we decide to ultimately pivot away from ReservationHop? It became clear that the marketplace amongst restaurants wasn’t as big as we had hoped, for a couple reasons. First, after personally speaking to many of the best restaurants in San Francisco, as well as elsewhere, we could see that the value add we were bringing to the table wasn’t compelling enough to inspire a change in behavior. There was a real hesitance on the part of restaurants to mark up their prices in the form of paid reservations, for fear that they would lose control over dictating the value of their product. And there were, of course, branding concerns for many restaurants beyond simply maximizing revenue.

And finally, there are only a handful of restaurants where consumers are willing to pay for a reservation. Of these, we could only provide a niche service for certain prime times or weekends. In order to build a long-term sustainable business, the market would have to expand significantly beyond exclusive restaurants.

As I wrote in the past, we set out originally to work with restaurants and that’s what we intend to do as we evolve into this latest iteration. The past couple of months have been extremely educational and I am excited to move forward with OK Shift. We have spent the time to build and ship a researched, well-considered and tested product that we believe will solve a giant pain amongst a huge portion of the population.

ReservationHop was an experiment, and an important stepping stone in building a sustainable business. Now, as we move forward as OK Shift, the sky’s the limit.

In three days we went from relative obscurity to being the punching bag of the entire tech industry. I suppose some might envy me for all the media attention I’ve received for a side project I built in my underwear one night after waiting in line for a burrito, but that sort of attention does not a legitimate business make. Getting covered in CNN has its perks, to be sure, but a business needs customers, and most of all, trust.

Let’s start with customers. Opening a firehose of traffic on ReservationHop, with the sales that followed, showed that there is indeed a validated secondary market for restaurant reservations. Paid restaurant reservations are not only desirable, but the market is heading that way as people awaken to the inefficiencies in the current system. Some restaurants, annoyed by empty tables reserved for no-shows and short-sats, are moving towards ticketing and deposits anyway. Multiple chefs and owners have pointed to OpenTable as more of a problem than a solution. A paid reservation system makes sense as a way to dissuade no-shows, distribute covers throughout the week, and even increase fairness for customers. As Tyler Cowen put it in the New York Times, “Money is ultimately a more egalitarian force than privilege, as everyone’s greenbacks are worth the same.”

The biggest criticism we have received has not been about the principle of selling reservations, but rather the methods we initially employed to hack this project into existence. We appreciate the criticism and honest feedback, which is why today ReservationHop is doing a “soft pivot” to address the same customer demand, and in addition work with the restaurants directly to cut them in on the deal. We believe that restaurants can benefit from selling reservations for a couple tables per weekend. This will not only reduce no-shows and mediate demand for their peak reservations slots in favor of off-peak times, but they will also get paid for filling these tables, instead of the other way around.

It was never our intention to harm the restaurants. In fact, as we promised from the beginning, we called to cancel 15 or so reservations that didn’t get claimed this weekend 4-6 hours in advance, so restaurants would not have to deal with no-shows.

In addition, I spent a lot of time in the last couple days speaking and meeting with restaurant owners personally, offering my apologies for the troubles we may have caused them and discussing how we may work together in the future on the massive opportunity that has presented itself. It has not been lost on many restaurants that with the sort of media coverage ReservationHop is receiving and the hundreds of local customers begging for instant access to their tables, they are not only getting free advertising as the hottest ticket in town, but are given the opportunity to make money filling their best tables at near-zero risk of no-shows. This is of course an opportunity that we need to explore with them over the next couple of weeks.

This also means that ReservationHop will be evolving, as all early-stage startups do, as we experiment to find a product-market fit. We may find that our early assumptions about customers or restaurants are faulty, or there are better services we can offer to the foodies of San Francisco that are more scalable. Or we may find that this entire venture doesn’t really have a large enough addressable market. One of the interesting things about the last couple of days is how our initial in experiment in customer demand was taken to be “what we do,” with little acknowledgement or understanding (at least outside of the lean-startup-model-aware tech community) that rapid iterations on business models are the norm. As far as I can tell, it is rare for early stage startups to have this much press attention this early in the game. One of the challenges for us will be to navigate the extreme press scrutiny while simultaneously experimenting to find a model that works.

As we evolve, we will continue to let customers have exclusive access to the best tables in the city, while making a new promise to restaurants: we hear your concerns, and we want to work with you. As always, if you are in the restaurant business please drop us a line: admin@reservationhop.com.

This morning I put the finishing touches on, and launched, ReservationHop.com, a site where I’m selling reservations I booked up at hot SF restaurants this Fourth of July weekend and beyond.

I built it over the weekend after waiting at Off the Grid for 30 minutes for a burrito from Señor Sisig, and realized that there’s got to be a market for the time people spend waiting for tables at our finest city dining establishments. Turns out I’m not the first person to think it, as there are two startups doing this very thing in New York City (here and here).

It’s a simple site with a simpler backend. I book reservations under assumed names, list them on ReservationHop, and price them according to the cost of the restaurant and how far in advance they need to be booked up. I don’t use OpenTable; I call the restaurants directly. And I have a policy of calling and canceling reservations that don’t get snapped up, because I don’t want to hurt the restaurants (the assumption being that on-demand restaurants with high walk-in traffic won’t have trouble filling those tables).

I anticipated some mild interest when I launched this morning, emailing the 20 or so potential customers I had interviewed at Off the Grid and some friends. I expected maybe having to make somewhat of an effort in order to get people to discover what I’m doing. I never expected a maelstrom of internet hate.

Not all of the responses have been negative, but an overwhelming number of them has been.

I totally understand the frustration people have with SF’s particular brand of “innovation.” And it seems that everywhere you look cherished public resources are being claimed by startups, whether it’s Google laying claim to bus stops or parking apps laying claim to, well parking spaces. I’d half expect someone to come along one day and put picnic blankets down in Dolores park and sell them at $25 apiece.

I also understand that this represents, as one Tweeter put it, “a caricature of SF tech bro shithead.” And as someone who spends a lot of time complaining to my friends about how much of an insular bubble San Francisco has become, what with apps built by the 0.1% for the 0.1%, I completely agree. In fact, I would have much preferred the media raised this much a fuss about Drillbit or The Creative Action Network or any of my other startups over the years.

But there’s something peculiar about SF, in that our media seems to love hating on stuff like this, so I guess I’m not surprised that I got Valleywagged almost immediately, followed by a post from The Next Web. I responded to an interview request from TechCrunch so it’s written up there too.

But let’s talk about the questions/criticisms everyone has. What was I thinking! How dare I sell something that’s free! Is this even legal? Is it ethical? Restaurants are going to hate this!

To be honest, I haven’t spent a lot of time thinking through these questions. I built this site as an experiment in consumer demand for a particular product, and the jury’s still out on whether it will work. But I can tell you what I have thought through.

The initial criticism has been about the fact that restaurant reservations are free, and I shouldn’t be selling them. First off, reservations aren’t free. Restaurant tables are limited, in high demand and people wait a good long time as walk-ins to get them. Reservations take time and planning to make and the restaurant assumes an opportunity cost from booking them. My friend joked that it took me less time to build this site than most people spend hunting for OpenTable reservations in a given year.

What about ethics? We are talking about an asset that most people don’t think about having a value. That doesn’t necessarily mean that it doesn’t have a value, or that people wouldn’t be willing to pay for it. For instance, no one would have thought that taking a cab during rush hour should cost more than a normal ride, until Uber launched surge pricing and we realized that people are willing to pay for it. Clearly, the service of booking a reservation in advance has value to patrons. This is evidenced by the startups doing this right now in New York City.

If someone does pay for it willingly, is it really unethical? The consumer has made a choice, the reservation stands, the restaurant gets a table filled as planned, and I have made money for providing the service. That seems perfectly ethical to me. I am aware that the ethical conundrum is around the “what if” question: If I book a table and no one buys it, the restaurant loses business, doesn’t it? I don’t know if that’s true yet, and I’m also working at a volume so low that it probably won’t matter. I’m canceling the reservations 4 hours before if they don’t get bought, and certainly a restaurant that’s booked weeks in advance won’t have trouble filling a table with their high walk-in traffic, or someone who gets lucky and snaps up the reservation for free on OpenTable.

But more importantly, I think that a paid reservation lets customers get skin in the game, and that means that restaurants might even reduce no-shows if paid reservations become a thing. When Alinea introduced ticketing (pre-paid reservations), they dropped their rate of no-shows by 75%. That’s a pretty good deal in an industry with razor-thin margins. I’m just speculating on whether this might provide value for restaurants; I can’t speak for them and need to parse this out over the next couple days.

So, back to becoming the most hated person in SF. I learned a lot today about how media, culture and technology in this city interact, and I have to say that overall, I think that the people who have sent me violent threats via email and Twitter, while excessive, may have a point. So in the interest of ethics and fairness, I want to talk to restaurants about working with them directly on a better reservation system. I’ve heard that OpenTable is loathed by many restaurants who don’t want to pay to fill tables. There may be a ticketing solution to high-demand restaurants. If you’re a restaurant, please drop me a line.

And if you’re a regular Jane or Joe, and you missed an opportunity to get a reservation at a hot SF restaurant for your first wedding anniversary this weekend, check to see if there are any reservations available for you at ReservationHop.com.

UPDATE: We have made a “soft pivot” to address feedback from the restaurant and tech industries. Read more here.